ECJ C-234/24 (Brose Prievidza) – Questions – VAT Refund when goods remain in the supplier’s Member State and the supply is artificially separated from the intra-community supplies

Articles in the EU VAT Directive

– Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax: Article 138(1)(a) and (b) and Articles 168 to 171;

– Council Directive 2008/9/EC of 12 February 2008 laying down detailed rules for the refund of value added tax provided for in Directive 2006/112/EC to taxable persons resident not in the Member State of refund but in another Member State: Articles 3 and 4.

Facts & Background

The applicant is the company ‘Brose Prievidza spol.’, which produces window controls, door modules and lifting devices. The applicant purchases parts of the Bulgarian company Integrated Micro-Electronics Bulgaria (hereinafter: IME) for its activities. IME was commissioned by the German company ‘Brose Coburg’ to manufacture special equipment (tooling) for the production of parts that would be supplied to the requesting party. Brose Coburg transferred ownership of the equipment to the requesting party, with the corresponding invoice from IME. The applicant paid this and at a later time requested a refund of the paid VAT stated on the invoice. This request has been rejected.

Consideration:

Under Directive 2008/9, the applicant is entitled to a VAT refund, but according to the tax authority, these arrangements do not apply to VAT amounts that have been declared unlawfully, such as the intra-Community supply of goods in this case. The request was rejected because the supply of the equipment and the deliveries of the end products constitute an economically indivisible supply, whereby the equipment (tooling) has lost its economic significance after the manufacture of the end product. The referring court doubts whether it can be assumed that the supply of equipment as an additional supply is or can be exempt from VAT if it is established with certainty that the delivered goods have not left the supplier’s country.

Questions

Based on Directive 2008/9, is there a right to a refund of the paid value-added tax (VAT) requested by the recipient of equipment (tooling) when the delivered goods have not left the territory of the supplier’s Member State and the supply of the equipment has been artificially separated from the intra-community supplies of products manufactured with this equipment to the same recipient?

Source